BL-2022-002117 - [2025] EWHC 2794 (Ch)

Data analysed by the ESFA in January 2017 indicated that more than 40% of the Company’s frameworks had a ‘Qualification Achievement Rate’ (“QAR”) of below the minimum standard of a 62% success rate, meaning that the Company had failed the SFA’s minimum standard requirement.

On 23 January 2017, Mr Hunter of the ESFA spoke to Lee Marples, who performed a reconciliation, showing that it had passed minimum standards and this explanation was accepted at that time by Mr Hunter. His evidence was that in light of his subsequent discoveries he would not now accept that explanation.

The ESFA was then approached by five whistleblowers over the period January to October 2018. All of those whistleblowers were former employees of 3AAA, and they alleged that the Company had been manipulating its data submissions to the SFA.

Mr Hunter’s suspicions of 3AAA’s QAR rates was reignited by an Ofsted provisional grade of “Outstanding” in May 2018 which usually required a QAR of over 70%. This prompted him to review and analyse the company’s data. He, Mr Smales and Mr Babcock (from the internal fraud team) discussed this and other data and believed they had worked out that 3AAA was manipulating its QAR rates and how it was doing it.

On 20 June 2018, the ESFA wrote to 3AAA to advise that it had carried out a review of ILR submissions from 2016-17 onwards and had identified “a number of anomalies” with the Company’s data submissions.

On 13 July 2018, the ESFA published an interim report on its findings on 3AAA, explaining that its preliminary conclusion was that data had been “deliberately manipulated to avoid AAA being subject to minimum standards (2015/16) and to falsely inflate the QAR rate in 2016/17”. In particular, it found that of the 160 records that had been amended to change the date of a withdrawal that had previously been logged with a different date, in 97.5% of cases the effect of the new date was to reduce the length of the apprenticeship to less than 42 days. That had the effect of excluding those learners from negatively affecting the QAR figures. The investigation team also found that dates had been changed in a “mechanical way” and, later, that a significant number of withdrawals had been recorded as taking place at weekends. This was essentially a statistical analysis of data anomalies which were of such number and had such common or unusual features that they were in the view of the investigators deliberate data manipulation. The report identified that further work was required to “prove” the allegations. An explanation had been provided on behalf of 3AAA by Ms McEvoy-Robinson (and according to the 3AAA’s 3 October 2018 letter) Peter Marples and Lee Marples, which was regarded as not statistically feasible by Mr Smales but the only way to corroborate, or conclusively disprove 3AAA’s explanations in the email was to look at the underlying hard-copy files.

In parallel with the data manipulation issues, the ESFA investigated the Company’s treatment of AGE Grants, which were payments of £1,500 per learner provided to employers to incentivise them to take on apprentices. Employers became entitled to the grant if a learner remained in learning for 13 weeks. When 3AAA moved to a direct contract basis with the SFA, those sums were paid to the Company so that it could pass them on to employers, which it was contractually required to do within 30 days. However, 3AAA had a backlog of more than £1m of AGE Grant money that had been received but not paid onward to employers.

On 10 September 2018, the SFA suspended 3AAA taking on new apprentices. On 13 September 2018, Ms McEvoy-Robinson and Peter Marples resigned, against a threat of suspension from the Board of 3AAA, and had their access to buildings and systems codes access removed. Lee Marples was suspended on or around 20 September 2018. 3AAA commissioned an independent review by BDO which was presented to the ESFA on 27 September 2018. The Company’s new management had reviewed the hard copy files which the SFA had not and this report sets out their findings and BDO’s review and conclusions on such findings. BDO’s review confirmed the new management’s findings that the previous explanations given by Ms McEvoy Robinson were wrong. On 3 October 2018 3AAA informed the ESFA that similar anomalies had existed well before 2016/17 and that “new management do not accept the explanations given currently to the ESFA that all changes were correct and there was no awareness around manual repayment mechanisms.”

On 8 October 2018 Eileen Milner, the ESFA’s then CEO, decided in consultation with senior staff and lawyers to give notice to terminate 3AAA’s three contracts with the Company. That decision was communicated to 3AAA at a meeting on 10 October 2018 in which the significant manipulation of QAR data and the retention of AGE Grant funding was said to “appear to be two instances of serious malpractice designed to give material gains to the company to which it was not entitled.” At that meeting, the ESFA also explained that its investigations would continue, that while the notice period continued the suspension on new starts was extended and there was a suspension of all future payments to 3AAA. On the morning of 11 October 2018, Mr Mapp informed the ESFA that 3AAA was closing with immediate effect.

3AAA was wound up by its own petition on 24 October 2018. The Parent Company entered liquidation on 21 August 2019, following the presentation of a petition by HMRC.

The ESFA continued its investigations after the Company’s entry into liquidation through to April 2020, when it finalised its closure report, which concluded, amongst other things, that the Company had “manipulated data to enhance their Qualification and Achievement Rate…and subsequent funding implications were ignored”. Although it stated that “The data is indisputable and the timing of the changes, as well as the mechanical nature of the changes, all point to deliberate manipulation of data” Mr Hunter accepted in cross-examination that the liquidation of 3AAA meant that the investigation had gone as far as it could and never reached the stage where there was a review of the hard copy files. Mr Smales also accepted that the investigation was inconclusive as to who was responsible for the data manipulation.

The matter was referred to Derbyshire Police by Action Fraud and investigated by the Insolvency Service in August 2021. Ultimately no further action was taken.